/Essential Commodities Act: Amendment is in the interest of farmers and consumers

Essential Commodities Act: Amendment is in the interest of farmers and consumers


  • Leena Nandan, Secretary, Department of Consumer Affairs

India has now become a country providing food security from a food shortage country. Of course this journey has been long, but now India is fully ready to fully utilize the true potential of the agricultural sector. This confidence has been further strengthened by the recent amendments to the Essential Commodities Act. The objective of the amendment is that the farmers get a fair price for their produce and at the same time, consumers also get different products at affordable prices as a result of robust supply chain management systems. This amendment is a far-reaching step that will certainly protect the interests of all stakeholders such as farmers, investors in the agricultural sector and consumers. In view of the constantly changing ground realities, a very effective policy change and a multi-pronged approach was absolutely necessary and this is the main aspect of this amendment.

Since 1955, food items have been regulated under the Essential Commodities Act intermittently and on some occasions for long periods. An examination of the facts of the last two decades shows that pulses were regulated for more than 10 years from 2006 to 2017 and similarly edible oils / oilseeds were regulated from 2008 to 2018. Rice was regulated for more than 5 years from 2008 to 2014. These years included periods of relatively low / stable prices. Implementation of the Essential Commodities Act for longer periods had raised fears of excessive regulatory interference and arbitrary imposition of stock limits.

These provisions were in fact discouraging investment. Higher production-lower prices and lower production-higher prices, in addition to losses due to post-harvest losses in the event of overproduction, adversely affect both farmers and consumers. This waste can be reduced with adequate processing facilities, which will provide remunerative prices to producers and ensure a strong supply to consumers. The amendment in the Essential Commodities Act will now definitely give a boost to the participants of the value chain in these commodities.

Exemption of agri-food items from the restrictive provisions of the Essential Commodities Act is expected to attract the organized sector towards agricultural trade. The established capacity of a value chain participant or the import demand received by an exporter will be exempted even if the stock limit is imposed. Due to this, the cost of production, storage, movement, distribution and supply can be saved in costs and attract private sector investment in storage / assay / marketing facilities for cereals, pulses, oilseeds, potatoes and onions. .

Section 3 (IA) (A) of the Amended Essential Commodities Act states that food, including cereals, pulses, potatoes, onions, edible oils, seeds and oils will be regulated only in exceptional circumstances, including war, drought. , May include unusual price increases and severe natural disasters.

According to Section 3 (IA) (B), any step related to imposing a storage limit will be taken only when the price reaches a limit, eg horticulture as compared to the average price in the last 12 months or during the previous year. 100 percent increase in the retail price of the crop and a 50 percent increase in the retail price of non-perishable food items, including exporters, processors, value chain partners of any agricultural product Only the public distribution system has been given suitable exemption. The amendment includes a definition of value chain partners associated with all such units that add value at every stage from production to consumption.

The question arises as to how the government will intervene effectively for price stabilization in the absence of regulatory powers. The Department of Consumer Affairs provides financial assistance to the State Governments for the establishment of Price Monitoring Centers for taking daily information on the retail and wholesale prices of 22 essential food items. 114 such centers are already operational across the country. Values ​​are compiled and analyzed every day through a dashboard created by DOCA.

The Inter Ministerial Committee reviews price trends on a weekly basis. There is an apprehension that the amendment will completely exclude food items, which is unfounded. In the event of a rapid price rise, any decision to impose stock limits will be based on all facts and market fundamentals. Even before the price trigger phase, emerging price trends will be effective with respect to various policy options, ie calibrated release of commodities from buffer stocks, liberalization of quantitative restrictions on imports, restrictions on exports. Policy intervention will be done as it benefits the consumers.

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